IFF Q2 Net Up 15% Amid Double-Digit Emerging Markets Growth

Posted: August 6, 2013

International Flavors & Fragrances Inc.’s (IFF) second-quarter net income jumped 15% amid double-digit growth in the emerging markets, which grew at twice the rate of the developed markets, as well as a high level of new wins in both flavor and fragrance.

Second-quarter net income rose to $102.3 million, or $1.24 a share, from $88.6 million, or $1.08 a share, a year ago. Adjusted per-share earnings, which excludes a gain on the sale of a non-operating asset as well as a restructuring charge related to the fragrance ingredients rationalization, increased 6% to $1.14 per diluted share in the second quarter, up from a reported and adjusted $1.08 per diluted share a year ago.

Second-quarter total sales rose 5% to $757.6 million from $721.3 million a year earlier. Excluding the impact of foreign currency, local currency sales rose 6%. Like-for-like (LFL)sales, which excludes the impact of foreign currency and the exit of low-margin sales activities in flavors, rose 8%.

“Looking forward, we expect to be able to deliver continued momentum in the second half of the year, noting that we are entering into a more challenging period on a comparable basis,” said Doug Tough, IFF’s Chairman and CEO. “We are optimistic about our ability to deliver local currency sales, adjusted operating profit and EPS growth for the full year in line with our long term financial targets.”

IFF’s fragrances unit posted a 7% to $383.6 million. Excluding the impact of foreign currency, local currency sales increased 8%. Fragrance compounds posted local currency sales growth of 10% in the second quarter, more than offsetting a 1% decline in fragrance ingredients. Within fragrance compounds, the fine and beauty care category had local currency sales growth of 13%, driven by double-digit growth in Latin America, North America and EAME. Functional fragrances had local currency sales growth of 7%, led by double-digit growth in Latin America and Greater Asia and solid growth in EAME.

The flavors unit posted second-quarter sales that rose 4% to $374 million. Excluding the impact of foreign currency, local currency sales rose 5%. On an LFL basis, which excludes the impact of foreign currency and the exit of low-margin sales activities, sales jumped 8% in the quarter, driven by strong new wins. Flavors experienced broad-based growth across both the emerging and developed markets. The emerging markets had double-digit LFL growth. On a regional basis, North America and Latin America delivered LFL double-digit growth of 11%, while Greater Asia and EAME delivered LFL sales growth of 8% and 5%, respectively.